coinculture.com
If you follow crypto influencers on social media, you’ve probably come across Alex Kruger – a well-known economist and crypto analyst for providing valuable insights into trends in the crypto industry. The economist recently warned that Russia could turn to cryptocurrency to bypass sanctions placed by the US and other countries. He warns crypto investors that this move could have a negative impact on crypto assets.
Sanctions amid conflict
The US and the UK imposed sanctions on Russia a week into the conflict between Russia and Ukraine. US president John Biden announced that the US would block the operation of five of Russia’s biggest banks and freeze all the assets these banks hold in the US. These assets are worth $1.37 trillion AUD. UK’s Prime Minister, Boris Johnson, followed suit by freezing assets of all major Russian banks held within the UK. The UK also cut these banks off from the UK financial markets.
Boris Johnson is also seeking to restrict the operation of companies of Russian origin as well as the Russian government within the UK market. He is making moves to prevent both these companies and the government from raising money from UK markets. The EU and G7 leaders are also taking steps to limit Russia from accessing foreign currencies, including yen, pounds, dollars and euros.
Why Russia using crypto is bad for the crypto sphere
Kruger warned his followers on Twitter that if Russia turned to cryptocurrencies to evade sanctions, there would be a negative impact on the value of crypto assets. His first argument is that US regulators (alongside its allies) would use the move by Russia as an opportunity to ban digital assets. Governments may make a move to protect national security. This move by the US and its allies could essentially crush the crypto industry. According to Kruger, the move will also affect other assets such as stocks and commodities.
Kurger’s assertions are evidenced by the drop in prices of cryptocurrencies in the last week and that of other assets including commodities and equities. The price of precious metals on the other hand has risen.
Kurger also argues that the situation in the crypto market and other assets could worsen if Russia invades more countries, China invades Taiwan or the conflict escalates and nuclear weapons are involved. However, these are worst-case scenarios that may not occur. If they don’t, then the markets will recover. According to Kruger, the crypto market has already hit bottom. Traders are starting to reinvest now. The value of Bitcoin is already on an upward trend and is likely to continue if the scenarios outlined by Kruger aren’t realised.